Practice Note 12 (revised) - money laundering - guidance for auditors on UK legislation

Comments from ACCA to the Financial Reporting Council (FRC), June 2010.

ACCA welcomes the opportunity to comment on the above Practice Note (proposed PN 12). In the main, we conclude that proposed PN 12 is well drafted and continues to be of considerable value. We make suggestions in relation to specific parts of the text as follows.

Paragraph 2
Footnote 2 to paragraph 2 explains what is meant by 'CCAB Guidance'.  Reference is also made to its publication by the ICAEW as 'TECH 04/08'. We suggest that it would assist readers if the relevant CCAB URL was cited. This can be accessed in the 'Related Links' section of this page.

If it is considered necessary to refer also to publications of individual CCAB bodies, that should be done for each body. ACCA has issued the CCAB guidance as Technical Factsheet 145 (please see 'Related documents'). 

ACCA has published much guidance for members that is relevant to money laundering and, on the assumption that the other CCAB bodies have made similar resources available, we suggest that it would assist users of the proposed PN if this were to be referenced.

Paragraph 5
In relation to the first sub-bullet of the third bullet point, we suggest that a better distinction could be drawn between reporting in relation to others and applying for consent concerning one's own involvement in money laundering activities. Legally, one applies for consent as a defence against one's own liability, as opposed to it being a legal requirement. The material concerning own involvement would be better set out as a separate point.

Paragraph 25 and Appendix 1
The second bullet point of paragraph 25 refers to breaches of the Companies Act or tax offences. Of the two, we believe that tax offences may be relatively more common, especially in smaller companies, for example through honest mistake in relation to complex VAT legislation. To reflect this we would prefer that Appendix 1 included an example of a tax offence. Guidance on tax offences would necessarily include consideration of the statements in paragraph 34 concerning the absence of a de minimis concession.

Appendix 1, example 1
The guidance should be extended to deal with the circumstance where the client knows the identity of the perpetrator of the offence, e.g., where someone has been convicted of the shoplifting.

Appendix 1, example 2
The guidance should be extended to deal with a further possibility - where overpayments are not credited to the profit and loss account, but are just carried forward as a credit balance.